FTX Digital Markets, the Bahamian subsidiary of the defunct cryptocurrency exchange FTX, will begin repaying creditors on February 18, 2025.
The repayment plan follows years of bankruptcy proceedings and legal disputes to recover lost funds.
This process aims to compensate affected users, prioritizing those with smaller claims before addressing larger ones.
FTX to Begin Initial Creditor Repayments
FTX plans to pay debtors with claims below $50,000 initially under their proposal to reorganize the company.
People under convenience class status will get 119% of their approved claims according to the restructuring plan.
The entire distribution for this category should amount to a total of $1.2 billion.
The payments will be distributed by the selected distribution partners BitGo and Kraken.
All eligible recipients must provide their identity verification as part of KYC and file the W-8 BEN tax form.
Customers who do not fulfill the necessary requirements can still obtain future payouts after missing the initial distribution process.
The company has already informed those users who did not satisfy the mandatory eligibility requirements.
The excluded creditors did not finish their verification procedures, and their claims exceeded $50,000.
The company has not specified the time frame when it plans to handle these cases.
Larger Claims to Be Processed in Later Distributions
FTX will distribute $17 billion in funds in stages, with payments made to larger claim submissions during later distributions.
During the second payment phase, set for the second quarter of 2025, FTX will deliver compensation for claims exceeding $50,000.
The first distribution of $7 billion goes to this specific group. The company remains silent regarding when the largest claimant payments will be distributed.
Creditors must complete all necessary verification procedures to obtain their compensation.
When approval procedures are delayed, the distribution process becomes longer.
BitGo assumes a primary role in managing a significant portion of these payment distributions to customers.
The BitGo platform provides customers full reimbursement while adding 9% of annual interest to their sums starting from November 2022.
Kraken maintains an unclear repayment schedule because it has not specified if it will use the BitGo payment process.
Excluded Creditors Face Uncertainty on Repayment Timeline
The initial payment distribution excludes some creditors whose claims are still under assessment since verification is incomplete.
Those who require payment delays include those with unsettled tax documentation and unresolved verification matters.
These creditors face an indefinite period without payments. The legal process involving FTX’s bankruptcy concluded in 2024.
Sam Bankman-Fried faced 25 years in prison after becoming the former FTX CEO. Different former executives from FTX received prison convictions during this time.
The investor Sunil Kavuri continues to demand prompt repayment of the $2 million that FTX took from him.
The FTX restructuring blueprint targets returning more than $16 billion to customers who experienced losses.
Certain debtors dispute the use of crypto values from the bankruptcy period as incorrect compensation distribution pricing.
Bitcoin prices increased 370% after FTX fell apart, making stakeholders dissatisfied with the compensation methods because their expected payment values shouldn’t be frozen at FTX’s bankruptcy-era rates.
